Tribunal Admits Petition for CIRP Against Private Company

The tribunal admitted the petition, initiating the Corporate Insolvency Resolution Process (CIRP) against the respondent, a private limited company, for an outstanding operational debt of Rs. 1,18,39,134/- including interest. A moratorium was declared, appointing an Interim Resolution Professional (IRP) to manage the process. The applicant was directed to pay an advance for smooth conduct of CIRP. Essential services to the respondent were to continue uninterrupted during the moratorium. The registry was to inform the Registrar of Companies to prevent detrimental actions against the respondent.

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Issues Involved:
1. Existence of operational debt.
2. Default in payment of operational debt.
3. Pre-existing dispute.
4. Compliance with procedural requirements under the Insolvency and Bankruptcy Code, 2016 (IBC).

Detailed Analysis:

1. Existence of Operational Debt:
The applicant, a sole proprietor of a firm dealing in cotton supply, filed a petition under Section 9 of the Insolvency and Bankruptcy Code, 2016, claiming an outstanding operational debt from the respondent, a private limited company. The applicant provided detailed evidence including tax invoices, e-way bills, and ledger accounts to substantiate the claim of an operational debt amounting to Rs. 1,18,39,134/- which includes interest from 22.11.2019 to 03.03.2020. The respondent acknowledged the commission payable and certain amounts due via email dated 15.12.2019.

2. Default in Payment of Operational Debt:
The applicant stated that despite multiple efforts, the respondent failed to make the payment of the outstanding operational debt. A demand notice was issued on 03.03.2020, but the respondent did not comply. The tribunal found that the applicant had provided sufficient documentary evidence to establish the default. The tribunal emphasized that the existence of debt and occurrence of default were clearly demonstrated by the documents presented.

3. Pre-existing Dispute:
The respondent raised several objections, including the existence of a pre-existing dispute due to a suit filed by the applicant against a third party for supplying inferior goods. The tribunal held that this dispute with a third party could not be considered a pre-existing dispute affecting the respondent’s obligation to pay the operational debt. Other objections raised by the respondent, such as non-confirmation of ledger accounts and alleged mistakes in the petition, were deemed illusory and unsustainable in the eye of law.

4. Compliance with Procedural Requirements:
The tribunal confirmed that the application was complete in all respects and within the limitation period. It referred to the Supreme Court judgment in Mobilox Innovative Private Limited vs. Kirusa Software Private Limited, which outlines the criteria for admitting an application under Section 9 of the IBC. The tribunal concluded that all conditions were met: the operational debt exceeded Rs. 1 lakh, the debt was due and payable, and there was no pre-existing dispute.

Conclusion:
The tribunal admitted the petition, initiating the Corporate Insolvency Resolution Process (CIRP) against the respondent. A moratorium was declared prohibiting the institution or continuation of suits, transferring of assets, and recovery actions against the corporate debtor. An Interim Resolution Professional (IRP) was appointed to manage the process, and the applicant was directed to pay an advance to the IRP for smooth conduct of CIRP. The order emphasized that the supply of essential services to the corporate debtor should not be interrupted during the moratorium period. The registry was instructed to inform the Registrar of Companies about the initiation of CIRP to prevent any detrimental actions against the corporate debtor.

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